Code No: R5-14/MBA R5

MBA-I Semester Supplementary Examinations,

July/Aug 2008.

FINANCIAL ACCOUNTING AND ANALYSIS

Time: 3hours Max. Marks: 60

Answer any FIVE questions

All questions carry equal marks
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1. Describe the Accounting principles and conventions. Why is it

important to have Accounting Standards?

2. Describe the Accounting process in detail.

3. On 1st July, 2004 Ram and Mohan purchased a second hand

machine for Rs.18,000 and spent Rs.2,000 on its repair and
installation.
On 30th June 2007, the machinery was disposed off for a sum of
Rs.13,600. Assuming the books are closed on 31st December each
year and assuming the rate of depreciation is 10% per annum on
the diminishing balance, show Machinery Account.

3. What is goodwill? Describe the different methods of calculation of

goodwill.

4. A company issues 10,000 shares of face value of Rs.10 each,

payable Rs.3 on allotment, Rs.2 on First call and Rs.2 on Final
call. All the shares are subscribed and duly allotted and both the
calls are made. All cash is duly received, except the final call on
200 shares. These are subsequently forfeited by the Directors and
are resold as fully paid for Rs.500. Give entries necessary to record
these transactions in the company’s journal.

6. What is the significance of financial statement analysis? What are

the advantages and disadvantages of financial statement analysis?

7. From the following particulars prepare cash Flow Statement of Mr.

Kumar

1st Jan 31st Dec

Rs. Rs.
Cash 5,000 4,000

Contd..,2
Code No: R5-14/MBA ::2::

Debtors 40,000 45,000

Stock 30,000 25,000
Land 30,000 40,000
Building 50,000 55,000
Machinery 70,000 80,000
_________________ _______________
2,25,000 2,49,000
_________________ ________________

Current liabilities 35,000 40,000

Loan from Mrs. Subha - 25,000
Bank Loan 40,000 30,000
Capital 1,50,000 1,54,000
_________________ _______________
2,25,000 2,49,000
_________________ ________________

During the year, Mr. Kumar brought an additional capital of

Rs.10,000 and his drawings during the year were Rs.31,000.
Provision for depreciation on machinery – opening balance
Rs.30,000, closing balance Rs.40,000.Prepare Cash flow statement.

8. Using the following data, complete the Balance sheet below:

Gross Profit (20% of Sales) Rs.60,000

Shareholders equity Rs.50,000
Credit Sales to Total Sales 80%
Total Assets turnover 3 times
Inventory turnover ( to cost of sales ) 8 times
Average collection period ( 360 days a year ) 18 days
Current Ratio 1.6
Long term debt to equity 40%

Balance Sheet
Liabilities Rs. Assets Rs.
Net worth Cash
Long term debt Debtors
Creditors Inventory
Fixed Assets

Total Total

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